Charles Trautman, EA · Since 1969

Retirement income: Social Security, RMDs, and giving from your IRA

Three things that decide most retirees’ tax bills, and how they work together.

Retirement income doesn’t arrive the way a paycheck did. Part of your Social Security may be taxed and part may not. At 73 the IRS starts telling you how much to take out of your IRA. And if you give to charity, there’s a way to do it that keeps the money off your return entirely. Each of these has its own rules; the tax bill comes from how they interact.

Current as of October 2026 · Figures are for tax year 2026

Social Security Required minimum distributions Giving from your IRA How they interact Colorado Questions

How Social Security is taxed

Not like wages. A formula decides how much of it counts, and the formula uses numbers set in 1983 and 1993 that have never been adjusted for inflation.

The formula starts with what the IRS calls provisional income: your adjusted gross income from everything else, plus any tax-exempt interest, plus half of your Social Security. Then it compares that total to two lines.

Provisional income thresholds
	Single	Married filing jointly
None of your benefit is taxed below	$25,000	$32,000
Up to 50% is taxable between	$25,000–$34,000	$32,000–$44,000
Up to 85% is taxable above	$34,000	$44,000

The percentages are ceilings, not rates. The actual taxable amount comes off a worksheet and is usually less than the ceiling until income is well past the top line. Married filing separately and living together: the threshold is zero.

Because the lines never move, each year’s cost-of-living increase pushes a few more retirees across them. A couple with $30,000 of pension, $10,000 of interest and $36,000 of Social Security has provisional income of $58,000, well into the 85% zone, even though nothing about their situation feels like high income.

You can have federal tax withheld from your benefit by filing Form W-4V with Social Security, at 7%, 10%, 12% or 22%. Many retirees prefer that to estimated payments.

Behind the scenes

An extra dollar of income in the 50-to-85% zone is taxed at your bracket rate plus the tax on the additional Social Security it drags in. In the 12% bracket that works out to about 22% on the margin; in the 22% bracket, close to 41%. That’s why we run the Social Security worksheet twice before saying yes to “just take a little more out of the IRA.”

Required minimum distributions

A traditional IRA is a deal with the government: no tax going in, full tax coming out. The RMD is how the government makes sure “coming out” eventually happens.

When they start

The year you turn 73 if you were born from 1951 through 1959; 75 if you were born in 1960 or later. The first one can be delayed to April 1 of the following year, but then two come out in one year, which usually isn’t worth it.

How much

Your December 31 balance divided by a life-expectancy factor. At 73 the factor is 26.5, so about 3.8% of the balance. It climbs every year; at 80 it’s about 4.9%, at 90 about 8.2%.

Which accounts

Traditional IRAs, SEP and SIMPLE IRAs, 401(k)s, 403(b)s and similar plans. Roth IRAs have no RMD while the owner is alive, and since 2024 neither do Roth 401(k)s. IRAs can be combined for the calculation and the total taken from any one of them; 401(k)s cannot.

If you miss one

The penalty is 25% of the amount you should have taken, reduced to 10% if you take it and file Form 5329 within the correction window. The IRS often waives it for a reasonable cause and a prompt fix. Ask us before you pay it.

Still working at 73?

If you’re still employed and don’t own more than 5% of the company, the RMD from that employer’s plan can wait until you retire. Your IRAs and old 401(k)s don’t get the delay.

Withholding

The custodian withholds 10% for federal tax unless you tell it otherwise on Form W-4R. Ten percent is rarely the right number. Many retirees have the whole year’s tax withheld from the December RMD instead of making quarterly payments.

Giving to charity from your IRA

If you’re 70½ or older and you give to charity anyway, this is usually the best way to do it.

A qualified charitable distribution sends money from your IRA straight to a charity. Up to $111,000 per person in 2026. It counts toward your required minimum distribution, and it never appears in your income at all.

That is better than a deduction. A deduction only helps if you itemize, and most retirees don’t anymore. A QCD helps everyone, and because it keeps adjusted gross income down, it also holds down the taxable share of your Social Security and, two years later, your Medicare premium.

The rules that trip people up: the check has to go from the IRA custodian to the charity, not through your hands. Donor-advised funds and private foundations don’t qualify. You must be 70½ on the day of the gift, not just that year. And there’s a one-time election, up to about $55,000, to fund a charitable gift annuity from an IRA.

Behind the scenes

The custodian’s Form 1099-R does not say “QCD.” It reports the full distribution as if you had taken the money yourself. Unless you tell your preparer the gift came from the IRA, it gets taxed. Every January we ask; every January someone says “oh — yes, I did that,” and we take several thousand dollars back out of income. Keep the charity’s acknowledgment letter with your tax papers.

How the three work together

Most retirees’ planning room is right here.

The RMD raises everything else

The year withdrawals become mandatory is often the year a retiree’s Social Security goes from partly taxable to mostly taxable, and the two effects stack: a $10,000 RMD can add up to $8,500 of taxable Social Security on top of itself. Two years later the same income can push Medicare premiums into a surcharge tier.

Medicare’s IRMAA surcharge starts in 2026 above $109,000 of modified AGI for a single filer and $218,000 joint, based on the return from two years earlier. One dollar over a line triggers the whole tier. More on IRMAA.

The QCD lowers it back down

Giving the RMD, or part of it, straight to charity takes that income off the return before any of the formulas see it. For someone who tithes or gives regularly, routing the gifts through the IRA from 70½ on can be worth thousands a year compared with writing checks.

The senior deduction, 2025 through 2028

Anyone 65 or older gets an extra $6,000 deduction ($12,000 for a couple both 65) on top of the standard deduction, whether or not they itemize. It phases out at six cents on the dollar above $75,000 of modified AGI single or $150,000 joint. It is not “no tax on Social Security”; the formula above is untouched. But for a retired couple with $90,000 of income it is roughly $1,400 to $2,600 of federal tax, and it arrives automatically. The new deductions explained.

Roth conversions before 73

Money converted to a Roth in your 60s is taxed then, at rates you choose, and never has an RMD. Retirees who convert steadily in the years between retiring and 73, filling a bracket each year and staying under the Medicare lines, often cut their lifetime tax and their survivor’s. Roth conversions and the widow’s penalty.

We can map this out

Bring last year’s return and your December statements. We’ll show you what the RMD will do to your Social Security and Medicare, and what a QCD or a conversion changes. Call 303-734-1040.

The Colorado side

Colorado is kinder to retirees than the federal rules are.

Social Security

At 65 or older, you subtract every dollar of Social Security that was taxed federally. From 55 to 64, you can too, if federal AGI is $75,000 or less single or $95,000 or less joint.

Pensions and IRA withdrawals

A separate subtraction covers pension, annuity and IRA income, including RMDs: up to $24,000 per person at 65 or older, $20,000 from 55 to 64. For many retirees it wipes out the state tax on the RMD. Colorado for retirees.

Charitable gifts

A QCD never enters Colorado income either, which matters because Colorado adds back part of large charitable deductions for higher earners. Give it away, pay tax anyway.

Common questions

Is Social Security taxed at 85%?

No. At most, 85% of the benefit is included in taxable income; that amount is then taxed at your regular bracket. A retiree in the 12% bracket with the full 85% included pays about 10 cents of tax per dollar of benefit.

Can I take my RMD from one IRA and leave the others alone?

Yes, for IRAs. Add up the RMDs for all of them and take the total from whichever accounts you like. 401(k)s and other employer plans each have to pay their own.

Can my RMD be a QCD?

Yes. Many people give the whole RMD to charity. Any amount of the RMD you don’t give still has to come out and is taxed as usual. The QCD has to be taken before any other distribution if you want it to count against the RMD first.

I inherited an IRA. Do these rules apply?

Different rules. Most non-spouse heirs must empty the account within ten years, with annual distributions in many cases. A surviving spouse has more choices. Final returns and inherited IRAs.

Does a QCD show up on my Colorado return?

No. It never enters federal income, so it never enters Colorado income, and it doesn’t use up any of the pension subtraction.

Retired, or getting close?

We prepare returns for retirees all over the Front Range and plan with them in the fall, when the numbers can still be changed. In person in Lone Tree or remotely, year round.

Start Here 303-734-1040

Sources and where to check

This page is general information, current as of October 2026, and is not advice about your situation. Tax law changes every year. Confirm anything that matters to you with us or at the sources below.